May and Federated Focus on New Retail Strategies

Amid laudatory speeches and confetti blasts, the ribbon was cut and around 11,000 customers streamed into the store throughout the charity preview day Oct. 3.

By all accounts, it was a strong soft opening for Robinsons-May, which held its official grand opening Oct. 9 for the debut of its prototype store at the Irvine Spectrum Center, located about 50 miles south of Los Angeles.

Now, officials at St. Louis-based parent company May Department Stores Co. wait to see if they have a hit on their hands.

As retailers try to coax jaded and cautious customers into reopening their impenetrable wallets, many are moving beyond the promotional selling strategy and adopting the radical approach of overhauling their stores. Federated Department Stores recently announced the upgrading of 42 of its stores. Even Wal-Mart Stores Inc. is testing its urban concept with the January 2003 opening of a three-level store built in a former Art Deco building in Baldwin Hills, Calif.

“The mall business is built-out and developers aren’t subsidizing department store leasing deals, so these retailers are trying to find new avenues of growth,” said Dan Millman, vice president of leasing at Center Trust, a real estate development firm in Manhattan Beach, Calif., who attended the opening charity festivities.

“This is a critical test for us,” said Craig Israel, president of the North Hollywood, Calif.-based, 57-unit Robinsons-May division. “The retail business needs a shot in the arm. To open a traditional store now would be going backwards.”

With a smaller footprint for the new store compared to typical stores, which average 160,000 square feet, Robinsons-May executives had to be judicious in editing their assortments. The bi-level store excludes furniture from the mix and stocks fewer china brands, sleepwear and bridge and missy options. For instance, Jones New York and Lauren aren’t carried there.

Youth-oriented looks and accessories are key to the store’s focus. Be, the company’s newly launched private label, and clothing brands Roxy, Polo Jeans, Tommy Hilfiger and Tony Hawk are prominent, and cosmetic brands Urban Decay and Smashbox Studios have squeezed out Elizabeth Arden and Shiseido in the open-sell department, according to Jean Miller, regional vice president of Robinsons-May.

The store’s design, featuring stainless steel fixtures, soft colors and sliding wall panels, also intends to create more fluidity for shoppers by clustering departments together, such as the tweens, juniors and young men’s sections.

Another difference is the lack of walls, wider aisles, a racetrack floor plan and stainless steel checkout counters located at the doors to improve the shopping experience.

“We don’t want to be Kmart-y, but our focus groups tell us that they want more ease in shopping,” Miller said.

The success of the Irvine store will impact the designs of future stores, Israel said. The company plans to plow back the ideas in up to 12 new stores slated to open within the next 30 months. San Diego, the Inland Empire and Northern California markets are key sites targeted.

Israel projects the first store will do at least $15 million in the first year.

Competitor Federated plans to redo 34 existing and eight new stores by mid-November for its Macy’s West, Macy’s East, Rich’s, Lazarus, Burdines, Goldsmith’s and Bon Marcheacute; divisions. In California, the Sherman Oaks, Glendale and Santa Clarita locations are among the 10 Macy’s stores slated for the upgrade. The next phase of the $100 million overhaul announced two years ago will roll out in 2003, eventually impacting 100 stores.

“We’ll follow the best course as customers respond to the changes,” said Jean Coggan, a spokesperson for Cincinnati-based Federated.

To make stores more family-friendly, convertible shopping carts with child seats and mesh storage areas will be available. The stores hope to appeal to the fickle teenager with a more “high-energy visual presentation” in the juniors and young men’s departments that will include Internet kiosks, high-end music systems and vending machines. Federated also hopes to keep shoppers’ companions happy with extensive fitting-room lounges with flat-screen televisions, telephones and sofas.

Creating new store formats is one way retail executives hope to win the sales wars against the newcomer to town, Kohl’s, which plans to open 30 stores in Southern California by March 2003. But, most believe they have a differentiated product to compete effectively.

“Our customer overlaps with the Kohl’s customer, but the difference is we offer strong customer service, more prestige in terms of gift-giving and designer brands,” Israel said. “Our customers may go there initially, but eventually, they’ll come back when they see the big differences.”